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DEC XVII DUBROVNIK,30.6.11

DEC XVII DUBROVNIK,30.6.11. TOMISLAV GALAC AND EVAN KRAFT “Monetary and financial policies for ‘de-euroization’ -a case study of Croatia” COMMENT by Oleh Havrylyshyn. CONTRIBUTION OF PAPER. UNLIKE MANY STUDIES PAPER CONSIDERS BOTH FE ELEMENTS( CE , DE) THEIR LINKAGES-ESP DE CAUSING CE

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DEC XVII DUBROVNIK,30.6.11

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  1. DEC XVIIDUBROVNIK,30.6.11 TOMISLAV GALAC AND EVAN KRAFT “Monetary and financial policies for ‘de-euroization’ -a case study of Croatia” COMMENT by Oleh Havrylyshyn

  2. CONTRIBUTION OF PAPER • UNLIKE MANY STUDIES PAPER CONSIDERS BOTH FE ELEMENTS( CE, DE)THEIR LINKAGES-ESP DE CAUSING CE • WISELY FOCUSES ON THE RISKIER ONE –CE. • BESIDE THE CONVENTIONAL DETERMINANTS (STABILITY, INTEREST, ER POLICY ) , PAPER GIVES DETAILED INSIGHT INTO 10 VERY NARROW DIRECT REGULATORY INSTRUMENTS OF CB,POINTS TO RELATIVE IMPORTANCE • PROVIDES MANY INTERESTING FINDINGS: e.g. ER stab.policy may raise FE at first, but eventually pays off, and it falls again.

  3. MAIN ISSUES TO ADDRESS • WHERE IS FINANCIAL DEPTH IN ALLTHIS ? • DEEPER ANALYSIS, SENSITIVITY TESTS FOR REGULATORY INSTRUMENTS • CLARIFY DOLLAR/ EURO PORTIONS AND ASK IF THE CHANGE MATTERS

  4. WHERE IS FINANCIAL DEPTH ? • NO VAR FOR FINDEPTH? WHY? • DOES INTEREST SPREAD PROXY THIS? • IS THAT ENOUGH? • SURELY FINDEPTH INCREASED AND WAS IMPORTANT IN PROCESS?

  5. REGULATORY MEASURES OF HNB- MEASURING,INTERPRETING • NUMBER OF REGULATORY INSTRUMENTS VERY LARGE, NOT EASY TO HAVE CARDINAL MEASURES , INTER-DEPENDENT EFFECTS • UEFUL TO HAVE MORE DETAIL ON HOW THIS VAST TASK WAS HANDLED, WHY JUST DUMMIES WHEN SOME (RR), (KHR) HAVE CARDINAL VALUE?WHICH CONCLUSIONS HAVE HIGH CONFIDENCE, WHICH NOT ?.

  6. REGULATORY MEASURES.2 • ONE APPROACH IS TO DO A LITLE MORE EXPERIMENTATION, SENSITIVITY IN SPECIFYING THESE VARIABLES. • ANOTHER MAY BE TO RETURN TO THE QUALITATIVE ANALYSIS OF Sec.4 DEFINING THESE VARIABLES AND TELL FULLER STORIES BASED ON ECONOMETRIC RESULTS. • EXAMPLE OF ABOVE: DESPITE EVASION PROBLEM FOR FCLR IT SEEMS ONE OF MOST IMPORTANT AND EFFECTIVE : EXPAND QUALITATIVE EXPLANATION

  7. EUROIZATION OR DOLLARIZATION • BOTH TERMS MEAN THE SAME, BUT AWKWARD AND PARTIAL; CENTRAL EUROPE SINCE 2000 EUROIZATION MAKES SENSE • BUT CROATIAN HAS A BETTER WORD FOR IT: VALUTIZACIJA (and a local literature” !!-Pertot (1980), Teorija Dispariteta Troskova, Cijena i Valuta”) • THIS IS MERE TERMINOLOGY; MORE IMPORTANT…..

  8. EURO/DOLLAR RATIO? • PRESUMABLY ROLE OF EURO IN “VALUTIZATION” INCREASED-USEFUL TO AT LEAST KNOW THIS. • EVEN MORE USEFUL IS TO ASK : DOES IT MATTER FOR ECONOMETRIC RESULTS ? • GLOBALLY, IN RECESSION YEARS TRADITIONAL FLOW INTO DOLLARS ROSE DESPITE SEVERE US CRISIS. DID THE SAME HAPPEN IN CENTRAL EUROPE, CROATIA? EURO-PERIPHERY CRISIS MIGHT SUGGEST YES—THIS MERITS ATTENTION

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